Adviser shortages could last nearly a decade
It will likely take nearly a decade for financial adviser numbers to be restored to their pre-Financial Adviser Standards and Ethics Authority (FASEA) levels in circumstances where new entrants to the industry account for barely half of the advisers who have left.
That is the bottom line of research undertaken by HFS Consulting principal, Colin Williams who has compared the number of advisers who have exited the industry to those who have entered, and the bottom line is that the industry is facing an adviser shortfall which might last well beyond 2025.
Adviser exits in 2019 were 8,413 but new adviser entrants were barely 4,017, fewer than half of the exits. This compares with 2018, when the data showed that there were 8,930 new entrants to the industry compared to 6,061 exists.
Similarly, in 2017 new recruits marginally outweighed exits with 5,410 advisers being appointed compared to 5,281 exits.
Early data for 2020 suggests that the level of exits was still significantly outstripping the number of new entrants with the picture having been made more complex by the impact of the COVID-19 pandemic and the manner in which this has impacted the sitting of the FASEA adviser examination and the delivery of financial planning degree and bridging courses.
Williams data analysis shows the private client sector has held up well compared to the broader advice market with just 553 resignations in 2019 with the superannuation sector also holding up well.
However, he noted that in terms of growth in adviser numbers, the superannuation funds did not appear to have moved to fill the void left by the exit of the major banks.
Recommended for you
As advisers risk losing two-thirds of FUA during the $3.5 trillion wealth transfer, two co-founders underscore why fostering trust with the next generation is vital to retaining intergenerational wealth.
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
Amid the current financial adviser shortage, advice firm Link Wealth is looking to expand its financial literacy program for high school students across the country.
TAL Risk Academy has updated its range of ethics courses to help financial advisers meet their CPD requirements following adviser feedback, including interpreting FSCP determinations.
